Competition Bureau needs to move back to real world after Rogers fiasco

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Canada’s Commissioner of Competition is paying out almost $13-million in legal costs to Rogers Communications Inc. RCI-B-T and Shaw Communications Inc. over what turned out to be a misguided attempt to block the two companies’ merger plans.

Taxpayers have every right to be outraged at commissioner Matthew Boswell for wasting their money on this fight. His Competition Bureau made a weak case, then kept running up legal fees through an appeals process – ignoring the fact that its arguments against the merger were “divorced from reality,” according to the Competition Tribunal ruling the commissioner unsuccessfully tried to overturn.

In the decision awarding millions to Rogers and Shaw, the Tribunal also referred to Mr. Boswell’s conduct as “intransigent” and “unnecessarily contentious.” It’s as harsh a legal smackdown as you’re likely to see. (Last week, after the decision on costs came out, a spokesperson for the bureau said they were “disappointed with some of the tribunal’s characterizations of the commissioner’s conduct.”)

Well, Canadians should be disappointed by the squandering of taxpayer dollars. And consumers should also be concerned the same commissioner who just made a hash of overseeing the country’s biggest telecom takeover continues to play a key role in reworking federal competition rules.

Roughly 1,200 employees leave Rogers as part of voluntary departure program after Shaw takeover

Recall that federal Industry Minister François-Philippe Champagne launched a review of the Competition Act last November. The process is now well under way. This work is critically important to the future health of the Canadian economy.

In a country that’s permitted economic concentration in numerous sectors – banking, groceries, airlines and movie chain, along with cellphones – consumers desperately need an effective competition watchdog. Based on miscalculations made on the telecom takeover, it’s fair to ask if Mr. Boswell is up to the job.

While politicians, not the bureau, will hold the pen on rewriting the rules, Mr. Boswell’s position gives him considerable influence, and he has made several speeches pushing for reforms. Some of his recommendations have clear merit. In a speech last October to the Canadian Bar Association, the commissioner pushed for speeding up the process that approves or blocks deals, as it took over two years to approve Rogers’s takeover of Shaw.

Mr. Boswell has also advocated for getting rid of what’s known as the “efficiencies” defence, a made-in-Canada approach to regulation that allows a takeover to go forward if there’s a net benefit to the economy, even if it lessens competition and harms consumers. In the mature Canadian economy, the fate of many future takeovers will be determined by the efficiencies defence.

In simple terms, the bureau lost its case against Rogers and Shaw because its lawyers tried to take an extremely narrow view of the deal. The bureau’s lawyers wanted to focus on the two telecoms’ initial takeover agreement announced in 2021 and largely ignored the subsequent 2022 agreement to sell Shaw’s Freedom Mobile business to Quebecor Inc QBR-B-T.

The three companies – Rogers, Shaw and Quebecor – successfully argued the regulator needed to focus on the final transaction, which created four national cellphone platforms, achieving a long-sought government policy objective.

Now, who do consumers want redrafting competition laws: A former prosecutor in Mr. Boswell who just got slapped down to the tune of $13-million for taking an overly legalistic view of regulation, or a bureau led by someone who applies a grounded, real-world approach to approving or blocking deals?

Mr. Boswell’s five-year stint as Commissioner of Competition expires next year. In Ottawa political circles, the consensus view is he doesn’t want another term at the bureau, and that the government has no intention of offering one. That would be the best outcome for all concerned.

In awarding costs to Rogers and Shaw, the tribunal said the commissioner’s approach to the deal “was intransigent and should now have consequences.” One consequence of a misguided regulatory battle should be new leadership at the Competition Bureau.